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The First $1 Million Drug?

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By Meg Tirrell, CNBC

May 8, 2018

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In the paradoxical world of drug pricing, the first U.S. price tag exceeding $1 million for a medicine is being contemplated as the nation's agita over the cost of prescription drugs climbs ever higher.

New gene therapies that aim to cure hemophilia, a disease affecting the blood's ability to clot, may carry prices of $1.5 million or more, analysts at Leerink wrote in a research note Monday.

Gene therapies deliver a healthy copy of a gene to make up for a defective one that causes disease, aiming to cure — or at least significantly improve — the malady in just one treatment. Such therapies for hemophilia are in development at drugmakers BioMarin, Spark Therapeutics and UniQure.

They're changing the way we think about delivery — and pricing — of medicine. The first gene therapy was approved in the U.S. in December, and received a price tag of $850,000 in January. Called Luxturna, it treats a rare form of blindness and is made by Spark.

A price of $1.5 million or more would set a new paradigm in the U.S.

"It appears the seemingly impervious million-dollar threshold may be breached with hemophilia gene therapy, which could do so while still creating value for society by reducing the cost of factor replacement therapy," Leerink analysts Joseph Schwartz and Dae Gon Ha wrote in their research note.

Factor replacement therapy is the current treatment for people with hemophilia, and is estimated to cost between $580,000 and $800,000 a year for adult patients, according to Leerink. For some patients, costs can approach $1 million a year, or even more. About 20,000 Americans have hemophilia.

For that reason, a potential one-time $1.5 million cost is perceived by many to be a bargain compared with a lifetime of chronic therapy.

Others, though, like Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, see it as excessive.

This will be the first major example of when cost effective/cost saving fails us in pricing. Kidney transplants are life saving but the surgeon doesn’t charge $1.5million. https://t.co/2leKnMyfrd

The Leerink analysts took the price of Spark's gene therapy, Luxturna, into consideration in coming to their price estimate, noting "one of the top questions about gene therapy treatments concerns the price which the market will bear," taking into account direct and indirect costs "as well as societal cost burden of the affliction."

They said there may even be "some headroom" above $1.5 million for hemophilia gene therapies, with the potential for the medicines, if approved, to be priced at $2 million per patient.